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Category: Low Interest Rate

In order for your business to grow or develop in the right direction, it is essential to be able to access funding sources that do not have associated high costs that increase, considering the financing acquired. We generally believe that the interest rate makes the difference between one source and another but, really, this is not the case.

Is a low-interest loan possible?

Since the crisis settled in our country during the years 2007/2008, traditional financial institutions on which companies applied for financing, began to include certain requirements that would become obstacles when it comes to requesting loans from companies. Raising the interest rates to which money was lent was one of the clear causes that made financing more expensive, causing the tap of liquidity to gradually close down.

As time passed, the loans became increasingly inaccessible. The interest rate was skyrocketing, in financial operations from 1 to 5 years was around 6% at its highest peak, October 2008 (according to data from the Bank of Spain, see interest rates on outstanding amounts – loans to companies non-financial, report 19.9 – time series table 19.9). The desperation of the companies to obtain financing was palpable and, on many occasions, due to this lack of liquidity, their businesses were in serious danger causing some of them to close down.

Data collected from the Bank of Spain.

Thanks to technologies and the birth of fintech, new financing alternatives are emerging that facilitate access to more advantageous financing subject to more accessible conditions by companies in need of liquidity. The phenomenon that has the most impact in Spain is the so-called crowdlending.

Currently, the national economic situation has improved, and with it the interest rates of the banks too, in fact, the interest rate on financial operations from 1 to 5 years was reduced to 1,753% as of June 2017. But, Are they really offering low-interest loans as observed or carry something behind? Let’s go see it.

What are we considering as a low-interest loan?

When a company needs to finance itself, the first thing it tends to compare is the interest rate at which the different lenders lend money without stopping to value anything else. The fact that this percentage or interest is higher or lower marks the attractiveness of one financing channel or another.

We must be careful, interest is not everything. It is possible to get a loan at low interest but with the underlying obligation to hire additional products that increase the cost of financing and, what we initially thought was a low-interest loan and “cheap” or at its fair price, become completely the opposite.

Low-interest loans with banks?

It is true that the statistics of the Bank of Spain in relation to the evolution of interest rates on loans and credits granted to non-financial corporations, is favorable, but at the time of requesting financing, everything must be valued. It tends to focus attention on the interest rate and not on the rest of the conditions that are demanded, or the small print that they put on it.

The loans, apparently, at low interest offered by banks are subject to a multitude of additional products that generally materialize in services to be contracted with the relevant entity. Some of them:

Life insurances

Hiring cards

Mortgage guarantees …

Let’s see an example:

Life insurance as the most common additional product in “low-interest bank loans”

Life insurance is the insurance that, in case of death of the person who hires it, guarantees compensation to the beneficiaries or relatives that the insurance holder chooses.

It is usually the star product associated with bank loans. This insurance obviously involves a cost for the contractor and forcing the hiring of this associated service to obtain the loan, in this way the cost itself is increased by obtaining the financing.

Low-interest loans through crowdlending

Crowdlending is the financial alternative that connects those investors who seek profitability, with those companies that need to finance themselves. The great advantage of this financing channel is the clarity and transparency of the information by both parties.

This clarity and transparency of the information are evident from the first moment in which the company requests financing. Absolutely all the conditions on which the operation is subject from minute one are known. Among these conditions is NOT the hiring of any type of additional service so that only 100% of your financing need is satisfied without forcing you to hire anything more unnecessary and that only makes the loan cost you more money.

It is very important that you inform yourself, that you read all the conditions and small print when you are going to perform an operation of this type to avoid surprises when the operation is more advanced.

In addition, this type of financing can be requested from home, from your own company or wherever you want. It is much faster since it involves less paperwork than bank financing.

Low-interest loans at MytripleA

In addition, in MytripleA we offer loans for companies at 2% per annum, without hiring additional products, with free amortizations and without leaving home.